Company formation in Hong Kong is the process of officially incorporating a business in accordance with the requirements of the Hong Kong law through the Hong Kong Companies Registry. The formation of a Hong Kong company offers entrepreneurs access to a top-tier low-tax jurisdiction while we ensure that the incorporation and setup comply with local regulations. Hong Kong is one of the most attractive business jurisdictions in Asia due to its low corporate tax rate, stable banking sector, developed infrastructure and geographic location. Hong Kong companies are widely used to trade with China, as well as for conducting international business in general. We offer clients the registration of a company in Hong Kong in the organizational and legal form of LTD - Limited Liability Company.
How to incorporate and setup your HK company
To form a company in Hong Kong remotely and without sending any documents by courier service to Hong Kong, you must provide a package of registration documents, as well as documents in relation to each director and shareholder of such a company.
In terms of procedure, a Hong Kong company can be registered:
- by electronic submission of documents (the fastest option); and
- by sending signed registration forms (hard copies) and submitting them to the register.
Company formation in Hong Kong - what documents are required
To complete your company incorporation and setup, the following documents should be submitted to us for further processing by the HK Business Register:
- Three options of the company name, in order of priority;
- Scanned copy of the passport of the director and the founder or other document confirming the identity;
- Selfie with the founder's passport;
- A document confirming the address (passport or utility bill) of the director and founder, not older than 3 months. The document must be in English or translated into English;
- Scanned copies of signed registration forms.
Hong Kong company structure
Director of a Hong Kong company
A Hong Kong company must have at least one director. Moreover, such a director does not have to be a resident of Hong Kong.
Both corporate directors (legal entities) and individuals are allowed.
The director of the company cannot simultaneously hold the post of secretary.
In Hong Kong the services of nominee directors are widely used. You should be aware that If the nominee director is a resident of Hong Kong, this may negatively affect the company's chances of obtaining "offshore" status. In addition, nominee directors in Hong Kong bear liability if the company becomes involved in fraudulent activities. For this reason, it is more common to appoint a non-resident of Hong Kong as a nominee director.
Shareholder of a Hong Kong company
Both individuals and companies can be shareholders.
There are no residency requirements for shareholders.
The minimum number of shareholders in a Hong Kong company is one.
The service of the nominee shareholder is practiced in Hong Kong and is regulated by local laws. Declarations of trust are subject to mandatory registration in the register of companies.
Hong Kong Company Secretary
The company secretary can only be a resident of Hong Kong (natural or legal person). We provide secretarial service for Hong Kong companies.
The secretary performs the technical functions related to the proper administration of the company in Hong Kong. For example, the Secretary prepares the minutes of the annual meeting of shareholders, accompanies the filing of changes in the structure of directors, shareholders, and so on in the register.
These roles are essential components of a compliant company formation in Hong Kong.
The authorized capital of a Hong Kong company
The minimum share capital is 1 HKD.
As a rule, capital of HKD 10,000 is prescribed in the statutory documents.
The authorized capital does not have to be paid to the company's bank account, which simplifies the procedure for registering an offshore company in Hong Kong.
Offshore in Hong Kong (Obtaining the offshore profits tax exemption)
Actually, Hong Kong as a jurisdiction has gained wide popularity and has become a kind of "Mecca" for businessmen from all over the world due to a well-thought-out system of territorial taxation. Hong Kong companies are eligible for Offshore Profits Tax Exemption if they do not operate in Hong Kong.
For this reason, many still want to incorporate an offshore company in Hong Kong.
At the same time, Hong Kong cannot be called a classic offshore, but it is quite possible to reduce the corporate tax to zero. Hong Kong is also called "midshore" which is something in between a normal jurisdiction and a classic offshore.
A company is eligible for offshore profits tax exemption, subject to the following conditions:
- Company employees are not residents of Hong Kong or visit Hong Kong on rare occasions;
- The goods traded by the company are not transported through the Hong Kong customs area;
- Negotiations with customers and suppliers do not take place in Hong Kong;
- The place of signing the contracts is not Hong Kong;
- The company does not provide any services in Hong Kong;
- Business management is carried out outside Hong Kong;
- The company has no Hong Kong counterparties.
An application for offshore status is filed with the Hong Kong Tax Office along with a Profits Tax Return (PTR) and an audit report.
There is a chance that the IRS will want to make sure that all transactions took place outside Hong Kong, and will request additional documents for verification.
Benefits of opening a company in Hong Kong
| Benefit | Description |
|---|---|
| Tax exemption | No corporate tax if the company operates outside Hong Kong and receives offshore profits tax exemption. |
| Low corporate tax rate | Standard rate is 16.5%; 8.25% for the first 2 million HKD profit for small businesses. |
| No VAT or GST | Hong Kong does not have value added tax. |
| Flexible corporate law | Based on the Common law model; supports effective governance and conflict resolution. |
| Not a "pure" offshore jurisdiction | Easier to open bank and payment system accounts. |
| No requirement for authorized capital | No need to pay or deposit share capital. |
| Remote registration and management | The entire process can be handled online. |
| Legal nominee services allowed | Assets remain protected when using nominee directors or shareholders. |
| Relatively low cost | Setup and maintenance costs are lower than in many other jurisdictions. |
| Ease of company formation | Hong Kongs straightforward incorporation procedure and efficient business setup via the HK business register. |
Disadvantages and risks of forming a company in Hong Kong
| Risk/Disadvantage | Description |
|---|---|
| Substance requirements | Local director and office may be required for opening a bank account in a Hong Kong bank, which can lead to cancellation of tax exemption. |
| Limited acceptance by European banks and EMI's | Some banks and EMI's prefer EU companies and may apply higher fees for non-EU entities. |
| Risk of losing offshore status | Mistakes like signing contracts in Hong Kong can lead to corporate tax being applied. |
| Mandatory annual audit | Audits are required and may cost several thousand USD. |
| Difficulty opening bank accounts in Hong Kong | Banks are cautious with non-resident beneficiaries, though alternatives exist such as EMI's |
How long does it take to open a company in Hong Kong
If you register a company by filing an electronic registration application, then it will take only 2 - 4 working days from the date of filing for the company to appear in the register.
If you register a company by signing paper forms and mailing them to Hong Kong, then the company registration period can take about three weeks from the date of filing the registration application.
Thus, it is possible to form a company in Hong Kong in relatively short time.
This e-filing option expedites your incorporation and setup with the Hong Kong business registry.
Is personal presence in Hong Kong required whn forming a company
No, personal presence is not required when registering a company in Hong Kong.
Personal presence is only required if you intend to pass an interview with a Hong Kong bank to open an account.
You can run the business remotely.
Prices for registering a company in Hong Kong
The cost of our services for registering a company in Hong Kong starts from 2000 Euro.
DHL courier from Hong Kong is paid separately - 100 Euro.
The package of services for registering a company in Hong Kong includes:
- Company registration services;
- Secretary services and legal address for the first year;
- Payment of government fees for the first year;
- Designated representative services for the first year.
A set of documents that you will receive upon registration:
- Registration certificate;
- Business registration certificate (BRC);
- Memorandum and articles of association;
- Form NNC1 (registration form);
- Certificate of shares.
Important! The documents are produced in originals without additional certification by a notary / commissioner of oaths and without an Apostille. If it is necessary to certify and apostille documents, we will separately calculate the cost of such documents, depending on the type of certification you have chosen. A more expensive option is a notary; the cheaper one is the commissioner of oaths.
If you want to purchase a shelf company in Hong Kong (an already existing company), then the price is determined depending on factors such as the age of the company.
Company maintainence
The cost of a company renewal in Hong Kong from the second year onwards starts from 1750 Euro*
The renewal price includes:
- Renewal of the legal address;
- Registered secretary services;
- Payment of state fees;
- Designated representative services.
* the prices shown on our website are for indicative purposes only. You can check the exact cost of registering a company in Hong Kong by contacting us directly.
Corporate taxes in Hong Kong
Income tax
The payers of income tax in Hong Kong are, in particular, legal entities registered in Hong Kong.
Income tax basis of taxation. Hong Kong has a territorial taxation system, which means that only income earned from its source in Hong Kong is taxed.
Rate. The standard income tax rate in Hong Kong is 16.5% for companies. A reduced rate of 8.25% applies to the first HK $ 2 million of profits. Profits in excess of 2 million are subject to corporate tax at the standard rate.
Dividends
As a general rule, dividends are not taxed in Hong Kong. Both incoming and outgoing.
Capital gain
As a general rule, capital gains (for example, the sale of an interest in a subsidiary) are not taxed in Hong Kong.
VAT
As mentioned earlier, there is no value added tax in Hong Kong.
Audit of a Hong Kong company - accounting and bookkeeping services
If you are planning to form a company in Hong Kong, it must be borne in mind that such a company is required to maintain accounting records. Accounting is carried out on the basis of the primary documentation of the company's business activities (bank statements, invoices, sales and purchase agreements, loan agreements, other contracts).
A prerequisite for a company to operate in Hong Kong is the preparation and submission of an annual financial report. The financial report is submitted to the local tax office and includes information on profit, loss, other balance sheet indicators, as well as explanations for the data presented in the report.
Companies doing business must undergo an audit of their financial statements. The audit is authorized to be carried out by audit companies licensed in Hong Kong.
The first statements of the company must be filed with the tax office after about 18 months from the date of registration (incorporation) of the company.
Together with the audited financial statements, the company annually submits a statistical report (Annual Return) to the register of companies. The report includes basic data on the company's management structure (data on the director, secretary), the address of the company and the types of activities that the company carries out.
Selection of a secretary, registered office and designated representative for a Hong Kong company
A secretary, a registered office and a designated representative are mandatory attributes of any company in Hong Kong.
If everything is clear with the secretary and the legal address, then the designated representative is a relatively new concept that appeared in 2018 after the introduction of the significant controllers register.
A designated representative in Hong Kong is a person appointed by a company to maintain the register of significant controllers of the company. It must be an individual, resident of Hong Kong.
Actually, you don't have to worry about choosing a legal address, secretary and appointed representative for the Hong Kong company. We take care of all these troubles when registering an offshore company in Hong Kong.
What types of businesses are registered in Hong Kong
Hong Kong is a fairly universal jurisdiction that allows you to register companies with both a holding business and active trading and service companies.
Of course, it can also be service outsourcing IT companies that provide services and receive payment under contracts / invoices.
Hong Kong is the most popular among trade and transport companies doing business related to the export of products from China to other countries.
We help clients to form a company in Hong Kong.
How to open a Hong Kong bank account
If you are not the happy owner of a passport of some respectable state (say, Germany), you will most likely not be able to open an account in a Hong Kong bank for your Hong Kong company.
Banks in Hong Kong have long been allergic to the beneficiaries of companies from many countries that fall under the high-risk category.
Where can I open an account for a Hong Kong company
Read about opening an account with OCBC Wing Hang Bank (China) Limited. It is one of the top banks in the Asian region where you can open an account with a Hong Kong company to do business.
Opening an account for Hong Kong companies is also possible in Serbia and Turkey. Well, do not forget about payment systems, of which there are quite a few. They are also willing to open accounts for Hong Kong companies.
Is it possible to run a business in Hong Kong remotely
Business management, and the company itself in Hong Kong, is completely remote.
You do not need to visit Hong Kong to prepare an audit of a Hong Kong firm, to hold general meetings of shareholders, or for any other formalities related to company administration.
The only time you may need to visit Hong Kong is to meet with a bank (if you would like to try opening an account with a local bank in Hong Kong).
Choosing a name for a Hong Kong company
The name of a Hong Kong company must not match or resemble the name of an existing company.
In this case, there is a chance that the register of companies, after receiving the registration application, will refuse to carry out the registration procedures and will have to submit a new application, but with a different name.
To prevent this from happening, we check the name of the future company on the register's website for possible matches.
The name of the company must necessarily contain the prefix “Limited”.
Which form of activity is better to choose
The main form of business (form of business) is a limited liability company, that is, a limited liability company. There are also other forms of doing business, for example, partnerships, private entrepreneurs, branches or representative offices of foreign companies.
A limited liability companyis a universal form of business where the company is registered as a non-resident of Hong Kong.
Permitted activities
Hong Kong companies are free to conduct any legitimate business.
Some specific activities may require a license, for example, for banks, insurance companies, money transfer operators.
Shelf companies in Hong Kong
You can purchase a shelf company in Hong Kong. These are the companies that are registered to a specific person and re-registered to the end customer at the time of sale.
What is the feasibility of shelf companies in Hong Kong? In fact, there is no particular expediency. The procedure for re-registering an enterprise will take the same period of time as the registration of a new company. And shelf companies, as a rule, are more expensive than the procedure for registering a company from scratch.
The only option when buying a shelf company in Hong Kong makes sense is when you need to acquire a company with a specific history or a specific age (aged company).
If this option is interesting, we will help you with buying a shelf company in Hong Kong.
How to close a Hong Kong company (liquidaton)
The Hong Kong company is closed by liquidation.
The liquidation procedure for a company in Hong Kong begins from the moment the company ceases all of its operations. At the time of termination, any company bank accounts must be closed.
Also, on the date of the termination of activities, a special audit report is prepared.
After the audit report is ready, the company submits documents to the Hong Kong tax office to authorize the liquidation of the company.
From a practical point of view, the procedure for liquidating a company in Hong Kong takes about 9 months.
Why choose Taxters to register your HK company
Ready to start your company incorporation and setup in Hong Kong? Register your business now with Taxters and we will assist with all formalities when setting up your Hong Kong Company.
Our team will assist you with further bank account opening and ongoing administration & audit in HK.
FAQ
What documents will I receive after registering a company in Hong Kong?
- Certificate of Incorporation;
- Business registration certificate;
- Charter;
- NNC1;
- Certificate of shares.
Is it possible to obtain offshore status in Hong Kong and not pay corporate tax?
Yes, you can. But you need to follow simple rules and not do business in Hong Kong.
How often do I need to file audit reports for a Hong Kong firm?
Is it possible not to pay a salary to the director of a Hong Kong firm?
Yes, you can.
